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Full Service EHR Software Services

CASH FLOW
$181,762

Specifications

  • Price
    $545,000

  • Cash Flow
    $181,762

  • Revenue
    $760,627

  • Service Area
    Local and national clients

  • Location
    Indianapolis, Indiana

  • Intangible Assets
    Strong reputation, numerous certifications, and contacts

  • Industry
    IT/Software

  • Employees
    3FTE (1 admin, 1 consultant, 1 marketing) with 5 current 1099 consultants

  • Account Receivable
    $100,000

With over $1.3MM in assets, this consulting firm successfully specializes in the implementation, integration, and workflow analysis of Electronic Health Records (EHR) for larger healthcare providers, health centers, and healthcare software companies.  There are 3 full-time employees in place, including 1 admin, 1 consultant, and 1 marketing person.  They do use 1099 consultants as needed for business.

 

Helping providers manage systems such as Meaningful Use, the Physician Quality Reporting System, the Merit-Based Incentive Payment System, or Alternative Payment Model is integral to the work completed by this company. 

 

Several certifications including R2, NAID, AAA, ISO, 14001, OHSAS 18001 are in place.  Staff utilize their personal certifications, such as NCQA, CCE, RHIT, CHTS-IM, and CHTS-PW to comply with project or contract requirements.

 

A buyer with a strong background in healthcare may find this business to be a great compliment to their existing skills.  This business is currently a certified Women’s Business Enterprise with current contracts for such an owner.   It may be helpful to be a veteran, woman, person with a disability, or minority if owning this business, but it is not necessary for growth. 

Business Highlights

  • Year Established: 2010
  • Location: Indianapolis, Indiana
  • Service Area: Serving local and national clients
  • Clients: Large healthcare providers, healthcare software companies, community health centers
  • Lease: currently utilizing a co-working space
  • Reason for Selling:  Retirement
  • Employees: 3FTE (1 admin, 1 consultant, 1 marketing) with 5 current 1099 consultants
  • Seller Training Period: 6 months
  • Growth Opportunities: Physician practices, compliance space, partner with larger healthcare systems; Growth on services: Add billing
  • Current Owners’ Responsibilities: Business development

Financial Highlights

  • List Price: $545,000
  • Gross Sales:
    • 2018: $760,627
  • Cash Flow:
    • 2018: $181,762
  • Assets Included in Purchase*
    • Intangible Assets: Strong reputation, numerous certifications, and contacts
    • A/R:  $100,000
    • WIP:  $1,200,000
    • Pipeline: $250,000

*amounts may vary

Cash Flow

Description of Financial StatementP&L StatementNotes
2018
GROSS SALES$760,627
Net Income Shown on Financial Statement$87,441
ADDBACKS
Compensation to Owner$28,837Owner 1 *buyer can do the reoles and responsibilities of owners 1 and 2
Compensation to Owner$43,076Employee 1
Compensation to Owner$50,000Owner 2
11% Tax on total W2 Salaries$13,410
Interest$1,160
Meals & Entertainment$70
Office Admin.$-45,000Replacement of Employee 1
CRM$2,500Non-onward going expense
Contributions$268
TOTAL ADDBACKS$94,321
Seller's Cash Flow = Total Addbacks + Net Income$181,762
Profit Margin23.90 %

  • Buyer can do the roles and responsibilities of owners 1 and 2

Clients

·         Large scale hospitals

·         Local, State, and Federal Governments

·         Community health centers with multiple inpatient facilities

·         Software companies working with providers

·         Physician practices

Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.

Services

For this Company, about half of the services fall under ongoing support and half are project-based services.  

 

Meaningful Use (MU)
 
  • Meaningful Use education and assistance
  • Workflow analysis
  • Implementation of new technology
  • Audit support
  • Physician Quality Reporting System (PQRS)
 
 
Patient Centered Medical Health (PCMH)
 
  • Assessment and planning
  • Implementation
  • Optimization
Physician Quality Reporting System (PQRS)
 
  • PQRS education
  • Vendor selection
  • Submission assistance
 
 
 
 
Merit-Based Incentive Payment System (MIPS)
 
  • Transition from MU and PQRS to MIPS
  • MIPS compliance
 

 

Additional information regarding services is available upon the receipt of a signed Non-Disclosure Agreement

Employees

  • Owner 1
    • Senior managing partner
    • Oversees all operations
    • Manages consulting staff
    • Manages major relationships

 

  • Owner 2
    • Managing partner
    • Sales and Marketing
    • Manages sales and marketing staff

 

  • Program Services Manager - 1
    • Works full time with customers
    • Responsible for success of meeting standards and goals

 

  • Delivery Manager - 1
    • Marketing and sales
    • Building client relationships
    • Administration - 1
      • Human resources
      • Accounting
      • 1099 Consultants - 5
        • Works with customers directly
        • Program education
        • Project planning
        • Facilitate the use and integration of quality tracking programs
        • Workflow analysis

Growth Opportunities

  • Expand client base
    • Medium physician practices
    • Larger health care systems
    • Work with State and Federal programs/agencies
  • Expand areas of specialization
    • Move into the compliance area
  • Other technical providers
    • Companies that offer complimentary services
  • Growth on services
    • Add billing

Valuation Details

The Firm Business Brokerage used a Cash Flow Valuation methodology to determine the Purchase Price of the business. 

The formula used is as follows:

Cash Flow       x          Prescribed Multiple     =          Fair Market Value

Cash Flow is the sum of business net income plus any owner perks and any non-onward going expenses.

A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.

For this business, a 2018 Cash Flow was used with a prescribed multiple is 3.  With this information, the computation is as follows:

$181,762         x          3          =          $545,286

The Fair Market Value found above positions the business List Price at $545,000.

Funding Example

Purchase Price:                                $545,000

10% Buyer Down Payment:               $54,500

20% Seller Financing:                      $109,000

70% Bank Loan:                                $381,500

Seller Financing 6-year term at a rate of 4.50% equals a monthly loan payment of $1,730.

Bank Loan 8-year term at a rate of 6% equals a monthly loan payment of $5,013.

After business expenses and loan payments, a buyer with a 10% down payment of $54,500 would retain a profit of $100,837, which results in a 185% return on investment in the first year.

A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed Purchase Price of $545,000 with the terms listed above, the coverage ratio is 2.25. 

Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available. 

 

Purchase Price:

$545,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

Funding Details

Business:

Offer Price: $

% Buyer Cash Down at Closing: $

% Seller Carry Back via Promissory Note: $

year term at a rate of %

% of Purchase Price secured by Buyer and Seller

Total Bank Loan Need: $

% of Purchase Price

Desired Loan Type:

Desired Bank Terms: year term at a rate of %

Total Business Assets, Inventory, and A/R: $

Total Undercollateralized Loan: $

Loan Payments

Monthly Payment to Bank: $
Yearly Payment to Bank: $
Monthly Payment to Seller: $
Yearly Payment to Seller: $
Total Monthly Debt Service: $
Total Yearly Debt Service: $

Conclusions

Fixed Charge Coverage Ratio

The bank will require a minimum ratio of 1.5 to be lendable.

Cash Flow:
2018 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2018 Cash Flow
$
Annual Debt Service: -$
NOI:

Buyer's Return on Investment (ROI)

The rate of return on the Buyer's down payment.

Down Payment: $
NOI:
ROI: %

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